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What net income would Dimmell make

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Reference no: EM133076885

Question - The statement of income for Dimmell Co. presented below represents the operating results for the fiscal year just ended. Dimmell had sales of 1,800 tons of product during the current year. The manufacturing capacity of Dimmell's facilities is 3,000 tons of product.

Dimmell Co. Statement of Income For the Year Ended December 31, Year 2

Sales $900,000

Variable costs:

Manufacturing $315,000

Selling costs 180,000 (495,000)

Contribution margin $405,000

Fixed costs:

Manufacturing $90,000

Selling 112,500

Administration 45,000 (247,500)

Operating income $157,500

Income taxes (40%) (63,000)

Net income $94,500

Dimmell has a potential foreign customer that has offered to buy 1,500 tons at $450 per ton. Assume that all of Dimmell's costs would be at the same levels and rates as in Year 2. What net income would Dimmell make if it took this order and rejected some business from regular customers so as not to exceed capacity?

A. $211,500

B. $252,000

C. $256,500

D. $297,500

Reference no: EM133076885

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